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Summary:Finance Ministers from the world's seven most industrialised nations (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) reached agreement on June 12 on the external representation of the Euro zone within the G-7. The agreement only provides for European Commission participation on specific topics such as aid to Russia. It therefore only partially respects the Conclusions of the December 1998 Vienna European Council which included the Presidents of the European Central Bank (ECB) and the EU Finance or Euro-11 Council along with a Commission representative in the external representation of the Euro zone.

Official sources indicated on June 14 that the European Commission has been neither consulted nor involved in this decision. Commission circles nevertheless believe it is "unlikely" that the agreement can be endorsed as it stands by the EU Finance Council since the Vienna accord has clearly not been respected. It remains to be seen whether the issue will be included on the agenda for its July 12 session and precisely how the Commission, traditionally the "guardian of the Treaties", proposes to act.

The G-7 nations propose to split meetings attended by the Governors of the Central Banks of the seven member countries. The first part will be reserved for issues relating to exchange rates, the global economy and multilateral surveillance. These discussions will be attended by the acting President of the Euro-11 Council (bringing together the Finance Ministers of countries participating in the single currency) and the Governor of the European Central Bank (ECB), Wim Duisenberg. They will "replace" the Governors of the Central Banks of the three G-7 members that have changed over to the Euro: France, Germany and Italy. The Euro-11 President, like the other Ministerial representatives, will be accompanied by his deputy. From July 1, Finland (not a member of the G-7) is set to take up the Presidency of the EU and the Euro-11. Finland's Finance Minister, Sauli Niinist", will therefore attend G-7 meetings. In a statement published at the close of their meeting, the G-7 members recognise that a decision was reached because of the importance of surveillance and exchange rate issues for Economic and Monetary Union. During the second part of the meeting (where the full gamut of questions pertaining to the financial system will be addressed), the three Governors of the aforementioned Central Banks will return to their seats. In principle, the presence of the Commission will not therefore be systematic.

The agreement was secured following protracted negotiations between the German Presidency of the EU and the United States, Washington having argued that the European Union was already over-represented within the G-7. America's Treasury Secretary, Robert Rubin, has described the agreement as a good balance indicating that meetings will be attended only by those who really need to be there.

The European Commission chose not to send a representative to the G-7 Finance meeting in Bonn on February 20, in protest against the German Presidency's decision to invite a high-ranking European official who would not however be allowed to participate in the meeting. The Commission felt this invitation was not consistent with the Vienna European Council agreement on the external representation of the Euro zone within the G-7.

At the Vienna European Council in December 1998, the EU Member States outlined procedures whereby the Euro zone might speak with a single voice on the international stage. In the case of G-7 Finance meetings, it was agreed that the Community's representation should consist of the acting President of the Finance Council (currently Germany), assisted by a representative of the European Commission. When the EU Presidency is held by a non-Euro zone country (i.e. by Denmark, Greece, Sweden or the United Kingdom), the single currency area would be represented by the Euro-11 President. Non-European partners within the G-7 have already accepted the proposal that the ECB President should attend meetings at which issues affecting EMU are to be discussed.
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Publication:European Report
Geographic Code:4EU
Date:Jun 16, 1999
Previous Article:EUROPEAN DIARY.

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